Rupee on Wednesday snapped a five-day losing streak, recovering 55 paise from its all-time low to close at 90.38 (provisional) against the US dollar, helped by suspected aggressive intervention by the Reserve Bank of India (RBI).
At the interbank foreign exchange market, the rupee opened weak at 91.05 per dollar but staged a sharp rebound to hit an intraday high of 89.96, marking a 97-paise gain from the previous close. It finally settled at 90.38, up 55 paise on the day.
On Tuesday, the domestic currency had slipped below the 91-per-dollar mark for the first time, touching a record low of 91.14 before ending at 90.93.
What halted the rupee’s one-way slide?
Bankers said the RBI stepped in aggressively, selling dollars to support the currency after a steep slide over the previous sessions. The rupee rallied to an intraday high of 89.75 on the interbank order matching system, from levels near 91.00 before the intervention.
The move mirrored the RBI’s actions in October and November, when it intervened strongly on multiple occasions to disrupt persistent one-way moves in the currency. In those instances, the central bank sold dollars heavily in both the spot and non-deliverable forward (NDF) markets, triggering sharp intraday reversals.
Unlike earlier episodes, when intervention came before market hours, dollar sales on Wednesday began shortly after onshore trading opened, a banker said.
“The Indian rupee appreciated after a five-day losing streak, bolstered by suspected aggressive intervention from the central bank,” said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar added that volatility is likely to remain high. “Technically, USD/INR has immediate resistance at 90.60 and support at 89.70,” he said.
Why did the rupee fall in the first place?
Analysts said the rupee’s recent weakness was driven largely by external factors rather than domestic fundamentals. The currency is among the worst-performing globally this year, down about 6 per cent against the dollar, weighed down by a widening trade deficit, punitive 50 per cent US tariffs and sustained investment outflows.
“No currency has been hit harder by US tariffs than India’s rupee,” analysts noted, adding that uncertainty over a US–India trade deal has kept investors cautious, reported Reuters.
“The rupee's record low against the US dollar was primarily driven by external factors, not domestic economic weakness,” said Deepak Agrawal, Chief Investment Officer – Debt and Product Head, Kotak Mutual Fund, PTI reported.
He cited “persistent capital outflows and dollar demand linked to non-deliverable forward maturities” as key reasons for the roughly 6 per cent year-to-date fall, making the rupee “Asia’s most negatively impacted currency in 2025”.
Despite India’s strong GDP growth, healthy forex reserves and a manageable current account deficit, the lack of progress in US–India trade talks and continued foreign portfolio selling have weighed on sentiment, Agrawal said.
“The RBI remains focused on curbing volatility rather than defending a specific level, supporting a market-driven approach,” he added, noting that the rupee could strengthen in 2026 if a trade deal is finalised and capital flows improve.
The dollar index was up 0.42 per cent at 98.56, while Brent crude rose 2.09 per cent to USD 60.16 per barrel. Domestic equities closed lower, with the Sensex down 120.21 points at 84,559.65 and the Nifty slipping 41.55 points to 25,818.55.
Foreign Institutional Investors sold equities worth Rs 2,381.92 crore on Tuesday, according to exchange data.